Understanding Insurance by Understanding Underwriters
Underwriters are the people in insurance agencies who actually determine whether or not the company will write a policy to cover you. They identify and calculate the risks of a claim or loss from prospective policyholders, determine who gets a policy, and decide how much you will pay for the policy in premiums. If they are too conservative with their estimates of risk, they will lose business to other insurance companies, but if they are too liberal, the insurance company could wind up broke by paying out too many claims to its policyholders.
Insurance underwriters using the aid of sophisticated computer software, analyze various data and decide whether or not an insurance risk is acceptable or not and whether it is likely to result in a loss. This software contains information and algorithms from businesses, medical reports and actuarial studies from around the nation. This is an extremely complicated process that has only just begun to get much easier thanks to the use of advanced computer programming features that allow the underwriter to retrieve and analyze vast amounts of data that were once either too extensive or too difficult to come by. The type of data analyzed of course depends on what type of insurance policy is being considered. Age, weight, family medical history, and gender will pay a part, for example, in determining whether or not you can get health insurance coverage. From that list, Age and gender are likely the only considerations that an insurance company will consider, among many other things, when deciding whether or not to write an auto insurance policy for you.
Groups of Further Complexity
More often these days, with the rising cost of insurance, people are banding together to get group insurance policies - especially in the areas of health and life insurance. Group insurance policies carry a single premium and provide coverage for many different people (many different types of risks). In these cases, the policy will usually reflect the aggregate, or average amount of risk among all the people in the pool, or the premium rate for the pool will adjust upward or downward on a regular basis in order to reflect the claims history that is being paid out on the policy.
Working Conditions
In 2006 the median annual salary for insurance underwriters was $52,350. Most work in comfortable office environments for the private insurance industry. Usually underwriters will possess a college bachelor's degree for entry level positions and must have a good head for math and understanding statistics as vital to the nature of their work.
At the end of the day, insurance underwriters do not tend to report that their work is extremely successful, and this is becoming more true as computers become a more essential part of their everyday work, in fact some computer applications are evaluating this data and presenting policies for simple situations without the assistance of an underwriter at all. Though the public rarely gets to deal directly with insurance underwriters - usually your contact with any insurance company is through an agent or a customer service representative - they are always behind the scenes, ready to run their numbers and come back with a "yea" or "nay" for any policy that is requested.